ELCA Board of Pensions Backs 'Housing Allowance' Legislation

CHICAGO (ELCA) -- The Evangelical Lutheran Church in America (ELCA) Board of Pensions is advising the church's pastors who claim part of their income as housing allowance "to contact members of Congress to prevent the elimination of this long-standing tax benefit" by supporting legislation U.S. Representative Jim Ramstad (R-Minn., 3rd) introduced in Congress.
The "parsonage tax exemption," which has been on the books since 1921, allows clergy to deduct the portion of their income that goes toward housing.
The Church Alliance -- a coalition of 32 Protestant, Catholic and Jewish benefits programs -- is backing H.R. 4156, Ramstad's bill to maintain the exemption. John G. Kapanke, president of the ELCA Board of Pensions, Minneapolis, chairs the alliance.
The U.S. Internal Revenue Service (IRS) challenged the amount of money that a Baptist minister in California had deducted as his housing allowance, saying it exceeded the "fair market rental value" of the house. A federal tax court ruled in favor of the minister, saying he could claim "the amount used to provide a home."
The IRS appealed the ruling to the Ninth U.S. Circuit Court of Appeals in San Francisco. In hearing the case, the appellate court announced plans to review first the constitutionality of the exemption.
Ramstad's legislation is "to amend the Internal Revenue Code of 1986 to clarify that the parsonage allowance exclusion is limited to the fair market rental value of the property," making the appeal and any further ruling in the case unnecessary. Ramstad is a member of the Republican majority on the Ways and Means Committee, which reviews tax matters brought before the U.S. House.
The ELCA Board of Pensions placed a "call to action" on its Web site, sent e-mail to the church's 65 synod bishops and is mailing a special newsletter to all of the church's pastors -- active and retired -- asking that e-mail and letters of support for Ramstad's legislation be sent to all members of Congress.
"Not only would the elimination of the housing allowance be a disaster for the 17,600 ELCA clergy, it would adversely affect the entire faith community in the United States. Ordained clergy of all denominations would experience a tax increase if they are unable to claim the housing allowance," said Kapanke.
"If the housing allowance is ruled unconstitutional, clergy of all faiths could face an immediate tax increase of $500 million or $2.3 billion over the next 5 years. This would come out of a pastors annual income, which, by many standards today, is already relatively low in comparison to other professions," he said.
Kapanke pointed out that the money to pay those taxes would most likely be diverted from support for programs of all faith groups.
The Church Alliance was formed in the 1970s and represents programs providing pension and health benefits to more than 1 million clergy, lay workers and their family members. It "acts on behalf of its members on legislative matters to protect church plans from unintended consequences of legislative or regulatory requirements which are applicable to secular plans," said Kapanke.
"The Church Alliance is leading the effort to enact legislation which would be intended to protect the housing allowance," he said. -- -- --
The ELCA Board of Pensions maintains a site at http://www.elcabop.org/ on the Web. A link to information about the housing allowance and to the Board's "Call to Action" is located currently in the Spotlight section, on the right side of the home page.

For information contact:
John Brooks, Director (773) 380-2958 or NEWS@ELCA.ORG
http://listserv.elca.org/archives/elcanews.html